Oil Co. Puts Another Well on Production
Research Report

Arrow Exploration Corp. (AXL:TSX.V; AXL:LSE) put its second well in the Carrizales Norte field, CN-2, on production after it encountered 60 feet of net pay on testing, reported Auctus Advisors analyst Stephane Foucaud in a July 27 research note.

163% projected return

Arrow's current share price is £0.20 per share, and Auctus has a £0.50 per share price target on the Canadian oil company, noted Foucaud. The difference between these prices implies a significant, 163% return for investors in the company.

Well performance

The Carrizales North field is located on the Tapir Block in Colombia's Llanos Basin where Arrow holds a 50% interest. Arrow's CN-2 well, in the Ubaque formation, initially flowed 1,012 barrels per day (1,102 bbl/d) of fluid and is now producing 680 bbl/d gross, Foucaud reported. Oil gravity is 13.6 degrees API.

To maximize recovery, Arrow set the electric submersible pump at the minimum optimal rate.

"The build-up analysis indicates the well can produce at 1,400 bbl/d gross at a consistent producible rate," wrote Foucaud.

As for how CN-2 compares to CN-1, the net pay, oil quality and achieved flow rate were similar, Foucaud added. A key difference, more favorable to CN-2, was the percent at which the water cut stabilized; 3% with CN-2 versus 28% with CN-1.

Water breakthrough at C-7 sands

In other news, reported Foucaud, testing of the C-7 sands was unsuccessful due to an immediate water breakthrough, possibly resulting from a cementing issue. Despite the perforations being 15 feet higher than at CN-1, the water cut reached 50%.

Plan moving forward

Arrow continues its exploration program in Colombia, Foucaud wrote. Now that the CN-3 well has been spud, the rig is being moved back to the RCE field. There, Arrow will drill two Gacheta wells in addition to the RCS-2 well in the C7 formation.

Once the RCS-2 well is completed, the rig will be returned to Carrizales Norte, where Arrow's initial focus is the Ubaque. There, the company will drill additional wells.

"Before taking into consideration natural decline and the future Ubaque wells, the four new upcoming wells could add 1,600 bbl/d net to Arrow, assuming 400 bbl/d per well (net to Arrow)," Foucaud wrote.